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Knowing Your Business: The Essential Guide for Aspiring Entrepreneurs

Knowing Your Business: The Essential Guide for Aspiring Entrepreneurs

By Thomas "TC" Sheehan

With over 30 years of entrepreneurial experience, 12 startups of my own, 8 successful exits, and investments in over 230 businesses, I've come to understand that the success of a startup hinges on one critical factor: how well you know your business and what to expect before you even get started. This guide outlines the essential questions every entrepreneur must rigorously consider to navigate the challenging journey of building a successful business.

The Problem

Understanding the Problem You’re Solving

  1. What problem are you solving?

    • Metric: Customer complaints per week

  2. What problem will be solved at the end of what you are doing?

    • Metric: Reduction in customer complaints (%)

  3. Can you state the problem clearly in two sentences?

    • Metric: Clarity of problem statement

  4. Have you experienced the problem yourself?

    • Metric: Personal experience relevance

  5. Can you define this problem narrowly?

    • Metric: Specificity of problem definition

  6. Who can you help first?

    • Metric: Identification of early adopters

  7. What can we address immediately?

    • Metric: Quick-win implementation rate

  8. How do we get the first indication this thing is working?

    • Metric: Initial feedback received

The Customer

Identifying and Understanding Your Customer

  1. Who is your customer?

    • Metric: Customer persona development

  2. Who is the ideal first customer?

    • Metric: Ideal customer profile accuracy

  3. How will they know if your product has solved the problem?

    • Metric: Customer satisfaction surveys

  4. How often does your user have the problem?

    • Metric: Frequency of problem occurrence

  5. Who is getting the most value out of your product?

    • Metric: Value extraction rate

  6. How intense is the problem?

    • Metric: Problem severity index

  7. Are they willing to pay?

    • Metric: Conversion rate from free to paid users

  8. How easy is it for your customer to find your product?

    • Metric: Market reach effectiveness

  9. Which customers should you run away from?

    • Metric: Identification of problematic customers

The Product

Ensuring Your Product Solves the Problem

  1. Does your product actually solve the problem?

    • Metric: Problem resolution rate

  2. Which customers should you go after first?

    • Metric: Early adopter engagement rate

  3. How do you find people who are willing to use your “bad” first versions of your product?

    • Metric: Beta tester recruitment success rate

  4. Who are the most desperate customers and how do you talk to them first?

    • Metric: Urgent problem-solving identification

  5. Whose business is going to go out of business without using you?

    • Metric: Dependency analysis

  6. Are you discounting or starting with a super low price?

    • Metric: Pricing strategy effectiveness

Performance

Measuring Success

  1. What 5-10 metrics are you measuring to understand how your product functions?

    • Metrics: Uptime, response time, error rate, user satisfaction, feature usage

  2. When you build a new product or feature, what is the metric that will improve because of that feature/product?

    • Metric: Feature-specific performance improvement

  3. What number do you track to show how well your company is doing?

    • Metric: Monthly recurring revenue (MRR)

  4. What is your top-level KPI (revenue, usage)?

    • Metric: Key performance indicator (KPI)

  5. What are the underlying metrics that contribute to achieving your top-level KPI?

    • Metrics: Churn rate, customer acquisition cost (CAC), lifetime value (LTV)

Product Development

Creating and Refining Your Product

  1. How long is your product development cycle?

    • Metric: Average development time

  2. Who is writing down notes at your product development meeting?

    • Metric: Note-taking efficiency

  3. Which category does each of your brainstormed ideas fit?

    • Metric: Idea categorization accuracy

  4. How easy/medium/hard are they to do?

    • Metric: Task complexity assessment

  5. How can you restate the hard ideas?

    • Metric: Idea simplification rate

  6. What parts of hard ideas are useless or hard?

    • Metric: Idea discard rate

  7. Which hard idea will improve the KPI the most? Which medium? Which easy?

    • Metric: KPI impact analysis

Exit Strategy

Planning for the Future

  1. What is your exit strategy for the startup?

    • Metric: Exit strategy feasibility

  2. Are you considering an IPO, sale to another company, or a management buyout?

    • Metric: Exit options exploration

  3. How will your chosen exit strategy impact the company’s valuation and the founders’ financial outcomes?

    • Metric: Valuation impact projection

Market

Understanding Your Target Market

  1. Who is your target market?

    • Metric: Target market size and segmentation

  2. What needs does your target market have that your product or service can address?

    • Metric: Market need alignment

  3. How will you reach your target market?

    • Metric: Market penetration effectiveness

Competitive Landscape

Knowing Your Competitors

  1. Who are your main competitors?

    • Metric: Competitor identification

  2. What are their strengths and weaknesses?

    • Metric: Competitor SWOT analysis

  3. What are their key marketing strategies?

    • Metric: Competitive strategy comparison

  4. What are their pricing strategies?

    • Metric: Pricing strategy analysis

  5. How are they positioning themselves in the market?

    • Metric: Market positioning assessment

  6. What are their growth plans?

    • Metric: Competitor growth trajectory

  7. What is your competitive advantage?

    • Metric: Competitive advantage assessment

Value Proposition

Defining Your Unique Value

  1. What is your value proposition?

    • Metric: Value proposition clarity

  2. How is your offering better or different from others in the market?

    • Metric: Differentiation index

  3. What benefits will your target market experience?

    • Metric: Benefit realization rate

  4. Is your value proposition realistic and achievable?

    • Metric: Feasibility assessment

  5. Have you tested it out on potential customers for feedback?

    • Metric: Customer feedback loop

Business Model

Building a Sustainable Business

  1. What problem are you solving with your business model?

    • Metric: Business model-problem alignment

  2. Who is your target market within this model?

    • Metric: Target market definition

  3. How will you make money?

    • Metric: Revenue model clarity

  4. What is your competitive landscape in this model?

    • Metric: Competitive analysis

  5. How will you scale your business?

    • Metric: Scalability potential

Sales and Marketing

Reaching and Converting Customers

  1. Who is your target market for sales and marketing?

    • Metric: Sales and marketing alignment

  2. What needs does your target market have that your product or service can address in sales?

    • Metric: Sales need fulfillment rate

  3. How will you reach your target market for sales?

    • Metric: Market reach efficiency

  4. What are your unique selling points in marketing?

    • Metric: Unique selling proposition (USP) clarity

  5. How will you convert leads into customers?

    • Metric: Lead conversion rate

  6. What are your plans for scaling your business in terms of sales and marketing?

    • Metric: Scalability assessment

  7. What are your budgets for sales and marketing?

    • Metric: Budget adherence

Team

Assembling the Right Team

  1. What does your team do better than any other team in the world?

    • Metric: Team differentiation index

  2. What are the unique skills and experiences that your team brings to the table?

    • Metric: Skill diversity score

  3. How do those strengths help you execute on your vision better than anyone else?

    • Metric: Vision execution capability

Financial Projections

Planning for Financial Success

  1. What are your financial projections for the startup?

    • Metric: Projection accuracy

  2. How much money will you need to raise based on these projections?

    • Metric: Funding requirements

  3. How quickly does your startup need to grow financially?

    • Metric: Growth rate

  4. What are your costs and revenue projections?

    • Metric: Cost-revenue ratio

  5. How will you generate revenue and achieve profitability?

    • Metric: Profitability timeline

As an entrepreneur, you must be obsessively focused on every aspect of your business. Knowing the answers to these questions is not just a theoretical exercise;

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